[Beowulf] RE: MS Cray

David Mathog mathog at caltech.edu
Wed Sep 17 16:33:25 EDT 2008


"Lux, James P" <james.p.lux at jpl.nasa.gov> wrote:

> Well.. That's always a trade.. Buying comes out of the capital bucket,
> leasing comes out of the expense bucket, and they have very different
> treatments, accounting wise.  Don't forget that JPL works on a "cost 
> reimbursement" basis: that is, we spend money, and the gov't, via
> NASA, reimburses those costs, and ONLY those costs.  There are
> literally bookshelves full of rules (the Federal Acquisition
> Regulations) that tell you what is allocable, accountable, and
> reimburseable. 

Translation: "bureaucracy is expensive".

> the US government will not pay for interest on borrowed money.

Don't tell the folks holding all of those US bonds! 

I'm pretty sure you meant that it will not allow its subsidiaries to
borrow money separately.

> Most capital investments have to be approved by an act of
> congress, and the amortization of that investment requires special
> treatment to make sure that costs are properly allocated to each
> project. Leasing makes it easy. Accountants cost money too, if you do
> march down the amortization process.  Many, many commercial
> companies have similar sorts of issues, particularly with respect
> to transactions between divisions (e.g. see Regulation W for
> banking), all designed to prevent "hiding profits".

Which leads to so much overhead that we end up with the $700 hammer (for
military work, which has even more of it), and at JPL, hardware prices
much above what an individual would pay to purchase the same item on the
open market.  (Without benefit of a volume discount).  There should 
be a happy medium between using regulations to squeeze out waste/fraud,
 and drowning in red tape.  To me this program seems rather closer to
the latter than the former.  

> Actually, before they went to a centralized support model, they found
> that the "shadow administrator" and "shadow support staff" costs were
> huge, and more to the point, not accurately measureable (what you
> can't measure, you can't manage).

Conversely, it may cost more to measure and manage than it saves.

>  And, while most JPL technical staff are certainly capable of doing
> their own support, there's good reason for them not to

Agreed.  However, there is a simple way to enforce that, deny end
users admin access to JPL supplied PCs.  (Well, it might not so simple
to keep the technically adept out of their machines. )


> Support isn't trivial here, even for office staff. For a variety of
reasons (and not unique to JPL.. Any other 5000+ employee, $1B year
business will have similar ones), we have an amazingly wide array of
various and sundry institutional applications to do things like
timecards, keeping track of inventory, document mangement, etc. I'd
venture that the desktop support staff spends more than 70% of their
time dealing with non-OS related software issues (e.g. why is my email
not getting through), and a very tiny fraction of their time responding
to hardware problems or OS issues.

Point 1, I believe you that support isn't spending much time fixing
hardware, which is why I think this contract is too expensive.  Point 2,
if the core software (presumably mostly web based at this juncture) is
so problematic, it would suggest that that is the place to go for cost
savings. 

> Let us not forget IT security. This is a non-trivial matter when you
have to manage tens of thousands of desktops and comply with dozens of
pages of government regulation, NASA procedural instructions, etc.
> 
> The upshot is, you get a fair amount for your $130/month support
subscription.  To put that in context, that's less than two hours of
engineer time.

So $4680 for three years for purchase and support of what type of
machine exactly? Does the XXX/month include the support of the
centralized business software, or just the end user's machine?  It was
my impression that it was the latter, which is why I thought this manner
of supplying computers to be overly expensive.  Surely network support
is covered in some sort of overhead and isn't allocated on a machine by
machine basis.

> For what it's worth, we have a similar sort of scenario when dealing
> with test equipment. Do you own it, and have in house inventory, 
> (with all the peculiar government contract stuff about cost
> accounting), or do you have an outside vendor provide it 
> on lease/rent.

That's a tough one.  I would assume that things like oscilloscopes and
voltmeters would be owned and kept in a pool for checkout.  These have a
long service life and aren't all that expensive.  For specialized and
expensive equipment, it is too complex to generalize, even before the
government purchase rules are thrown into the mix.  These sorts of tools
often need expensive service contracts if purchased (to cover the
replacement of failed parts which are not generally available), and it
often comes down to 6 of one and half dozen of the other if buy or lease
is most cost effective.  

It's a different problem though.  Most test equipment is not a
commodity.  Computers are.

Regards,

David Mathog
mathog at caltech.edu
Manager, Sequence Analysis Facility, Biology Division, Caltech
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